12 Trends Shaping the Outsourcing Market
Rather than just seeking the lowest prices, buyers are relying on more sophisticated techniques.
Just under a year from now, when 2012 is drawing to a close and the pundits are talking about the biggest tech story of the year - the one development that altered the IT landscape more dramatically than any other - it will be a relatively easy call. They'll use phrases like "game changer" and "the end of the IT services industry as we know it." The biggest tech story of 2012 - and perhaps the biggest business story of the year - will be the implosion of the H-1B visa-centric business model of the major U.S. and non-U.S. IT services providers.
The catalyst for the implosion will be universally identified as the courageous quest of Jay Palmer, a man whose technology and people skills made him a rising star within Infosys, the giant Indian IT services provider whose lifeblood for years has been the supply of temporary work visas that have enabled it to bring foreign workers to this country by the thousands. It will all center around the gut-check performed by Palmer when he refused to take the cowardly, self-serving route so many of his colleagues had taken by turning a blind eye to the visa and tax fraud that he found was rampant within his company.
The pundits will marvel at the resolve Palmer showed in October 2010, when his adherence to the company's whistleblower policy was met with shameless derision and inaction on the part of Infosys' management. They will recount how the visa and tax fraud lawsuit Palmer filed against the company in February 2011, sparked a criminal investigation by U.S. government authorities, unprecedented in its scope and rigor, as investigators from the Department of Homeland Security, Department of State, Department of Justice and the Internal Revenue Service joined forces to bring Infosys to account for its actions once and for all.
What will be forgotten, meanwhile, is how it all happened while Infosys, and those captivated by its power and influence, acted as if none of it mattered - indeed, as if they were convinced that the ramifications of the actions taken by Palmer and by his attorney, Kenny Mendelsohn, the "Alabama street lawyer" who proved to be as relentless as Palmer in his quest to bring Infosys to justice - would all be lost in an obscure footnote to the IT record of 2012.
As 2011 drew to a close, Infosys watchers, especially those in India, were almost completely oblivious to the game-changing nature of the legal problems that Infosys was facing in the United States. One glaring example occurred in a year-end interview with Infosys co-founder and chairman emeritus Narayana Murthy, when India's Deccan Chronicle asked him this question: "What do we need to do in 2012 to move away from crony capitalism and sweetheart deals towards a more just and fair society?" Read Murthy's response carefully:
We must all learn to live by a certain code of conduct, whether we are politicians or in the corporate sector. The question to ask is: Why is it that we have a system that encourages people not to behave in the right way? The reasons are very clear. In India, we don't have a speedy justice system; we don't have punishment that's many times the benefit one derives from wrongdoing; there's no encouragement to honest bureaucrats and politicians. Other societies have done this a long time ago.
The irony appeared to be completely lost on the interviewer. There was no follow-up question to find out how Murthy was able to reconcile his lamentation that "we have a system that encourages people not to behave in the right way," and that lacks "punishment that's many times the benefit one derives from wrongdoing," with the fact that he created and for decades oversaw a company that developed an institutionalized culture of visa and tax fraud in order to increase profits, and a practice of blatant retaliation against anyone who dared to challenge it.
I'm going to follow up on this theme with more examples in a subsequent post. The transformation of the Infosys watchers from being mired in oblivion to recognizing that Infosys' wrongdoing was the catalyst for what will be the story of the year, will be a fascinating one to watch as the new year unfolds.